Purchase fee row: Punjab refuses to pick up the gauntlet thrown by Centre

October 29, 2020 6:45 AM

Punjab and Haryana are the only two states where the procurement continues to be wholly routed via APMC mandis.

The monies collected as RDF — around Rs 1,750 crore in FY20 alone — have been spent on infrastructure of procurement centres, the minister told FE.The monies collected as RDF — around Rs 1,750 crore in FY20 alone — have been spent on infrastructure of procurement centres, the minister told FE.

By Prabhudatta Mishra

Even as a recent fiat by the Centre to the Punjab government put the so-called rural development fee (RDF) collected by the latter from the Food Corporation of India (FCI) for central pool purchases under scrutiny, Punjab’s food minister Bharat Bhushan Ashu sought to avoid a showdown with New Delhi on the issue, and said that the RDF proceeds haven’t been diverted. The monies collected as RDF — around Rs 1,750 crore in FY20 alone — have been spent on infrastructure of procurement centres, the minister told FE.

“We want to make sure that the (ongoing paddy) procurement continues uninterrupted and the farmers get the minimum support price (MSP) in time. Regarding these incidentals (RDF), our officials will discuss with the Centre and sort the issue out,” Ashu said. He, however, questioned the timing of the Centre raising the RDF issue (the kharif procurement process is gathering momentum), but added, “like other issues, we will keep pursuing it.”

On October 26, the Union food ministry sent a letter to secretary-food and civil supplies in Punjab government, seeking “information on how and what percentage of the RD Fee is being spent on improving infrastructure of procurement centres i.e amount utilised as per revised principles dated February 24, 2020.”

It also pointed out that, “the RD Fee which is applicable as per the Section 7 of the of RD Act, 1987, of Punjab includes activities other than that mentioned in the PPI (principles for procurement incidentals) dated 24.02.2020 such as for medical dispensaries etc.”

A senior Union food ministry official told FE: “After due deliberations with states including Punjab, the revised principles for procurement incidentals were finalised in February, 2020. It was agreed at that time that only those charges which are being utilised for improving the procurement infrastructure and the quality of procurement centres should be part of such financial assistance (as RDF)”.

Though both the Centre and the state officials dub the food ministry’s latest communiqué as ‘routine,’ a footnote in the provisional cost sheet on paddy procurement for 2020-21 season attached to the letter by union food ministry clearly stated that matters related to deductions from MSP made by the State and utilisation of RDF for the purpose of development of procurement centres is “under scrutiny”.

The Centre’s directive assumed political importance given the context of Shiromani Akali Dal leader Harsimrat Kaur’s resignation from the Narendra Modi Cabinet over the new farm laws, which, the critics say, could undermine the mandi system and MSP procurements.

Punjab and Haryana are the only two states where the procurement continues to be wholly routed via APMC mandis. Both the states also maintain much higher level of taxes on agriculture trade, inflating the Centre’s food subsidy outgo.

The agriculture marketing reforms through the two new Bills passed by Parliament will help the Centre reduce the tax burden on it on account of the Food Security Act/PDS, if FCI and other agencies start procuring at the market rates circumventing the mandis.

Prime Minister Narendra Modi has repeatedly said that the MSP system would continue. Stating that the current laws tied the hands of farmers, he said the reforms would enable them to be self-sufficient with access to multiple buyers.

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